Master Company Types: Nature and Legal Characteristics

Question 1

Which of the following is NOT a characteristic of a limited liability company (LLC)?

Accepted Answer

Shares are freely transferable

Answer

Separate legal entity from its members

Answer

Limited liability for members

Answer

Perpetual succession

Question 2

What is the primary difference between a public limited company (PLC) and a private limited company (LTD)?

Accepted Answer

PLCs are subject to more regulations than LTDs

Answer

PLCs have unlimited liability while LTDs have limited liability

Answer

PLCs have more members than LTDs

Answer

LTDs can raise capital through public offerings while PLCs cannot

Question 3

What is the difference between a company's authorized share capital and its issued share capital?

Accepted Answer

Authorized share capital is the maximum number of shares that a company can issue, while issued share capital is the actual number of shares that have been issued

Answer

Issued share capital is the maximum number of shares that a company can issue, while authorized share capital is the actual number of shares that have been issued

Answer

Authorized share capital and issued share capital are the same thing

Answer

Issued share capital is always less than authorized share capital

Question 4

What is the purpose of a company's Memorandum of Association (MOA)?

Accepted Answer

To define the company's objects or purposes

Answer

To set out the company's constitution and rules

Answer

To name the company's directors

Answer

To specify the company's share capital

Question 5

Assess the significance of auditors in ensuring the accuracy and reliability of company financial statements, considering their role, responsibilities, and the challenges they face.

Accepted Answer

Auditors maintain independence from the companies they audit to ensure their objectivity.

Answer

Auditors are exclusively responsible for detecting and preventing fraud within companies.

Answer

Auditors bear no liability for losses incurred by investors due to inaccurate financial statements.

Question 6

Which of the following is NOT a feature of a limited company?

Accepted Answer

Unlimited liability

Answer

Separate legal personality

Answer

Limited liability

Answer

Perpetual succession

Question 7

What is the primary purpose of a company's memorandum of association?

Accepted Answer

To outline the company's objectives and activities

Answer

To define the rights and responsibilities of shareholders

Answer

To appoint the initial directors of the company

Answer

To register the company with the relevant authorities

Question 8

Which of the following is a type of share capital that carries a fixed rate of dividend?

Accepted Answer

Preference shares

Answer

Ordinary shares

Answer

Deferred shares

Answer

Redeemable shares

Question 9

Which UK government agency is responsible for overseeing the formation and regulation of companies?

Accepted Answer

Companies House

Answer

Financial Conduct Authority (FCA)

Answer

Her Majesty's Revenue and Customs (HMRC)

Answer

Department for Business, Energy & Industrial Strategy (BEIS)

Question 10

Which of the following is a defining feature of a limited company?

Accepted Answer

Separate legal entity from its members

Answer

Unlimited liability of members

Answer

Fixed-term existence

Answer

No requirement for a board of directors

Question 11

A company limited by shares differs from a company limited by guarantee primarily because:

Accepted Answer

Its members' liability is limited to the extent of their unpaid shares

Answer

It is prohibited from engaging in commercial activities

Answer

It must distribute profits to shareholders

Question 12

Which of the following best describes a public company?

Accepted Answer

A company whose shares are offered for sale to the general public

Answer

A company with a small number of shareholders

Answer

A company that is exempt from corporate tax

Question 13

Which of the following is a primary duty of company directors?

Accepted Answer

To act in the best interests of the company

Answer

To ensure the company's growth at all costs

Answer

To prioritize the interests of individual shareholders

Question 14

A key attribute of a company limited by shares is that:

Accepted Answer

Its members' liability is limited to the amount unpaid on their shares

Answer

It is required to hold annual general meetings

Answer

It must have a board of directors with at least five members

Question 15

Which of the following is NOT a recognized type of private company in the UK?

Accepted Answer

Public limited company

Answer

Guarantee company

Answer

Limited company

Answer

Unlimited company

Question 16

A defining characteristic of a partnership is that:

Accepted Answer

The partners share joint and several liability for the partnership's debts

Answer

Partnerships are subject to double taxation

Answer

Partnerships are required to register with a government agency

Question 17

Which of the following types of business organizations lacks a separate legal identity?

Accepted Answer

Sole proprietorship

Answer

Limited liability partnership

Answer

Cooperative

Question 18

Which of the following is NOT a statutory duty of a company director in the UK?

Accepted Answer

To act solely in the best interests of the company's creditors.

Answer

To avoid conflicts of interest.

Answer

To act in good faith in the best interests of the company.

Answer

To exercise reasonable care, skill, and diligence in carrying out their duties.

Question 19

Which type of company is formed for a specific purpose and has a limited lifespan?

Accepted Answer

Project company

Answer

Joint venture

Answer

Holding company

Answer

Subsidiary company

Question 20

What is the fundamental difference between a corporation and a partnership?

Accepted Answer

A corporation is a separate legal entity, while a partnership is not.

Answer

Corporations are typically formed for profit-making purposes, while partnerships can be formed for non-profit purposes.

Answer

Corporations are generally subject to stricter regulatory oversight than partnerships.

Answer

Corporations have perpetual succession, while partnerships may dissolve upon the departure of a partner.

Question 21

Which of the following is NOT a key characteristic of a company in the UK?

Accepted Answer

Unlimited liability of its members

Answer

Perpetual succession

Answer

Capacity to own assets and incur debts

Answer

Separate legal personality

Question 22

A company limited by guarantee is typically formed for which purpose?

Accepted Answer

Non-profit or charitable activities

Answer

High-risk business ventures.

Answer

Holding valuable intellectual property.

Answer

Providing professional services like law or accounting.

Question 23

Which document outlines the internal rules and regulations governing a company's operations?

Accepted Answer

Articles of Association

Answer

Shareholder Agreement

Answer

Certificate of Incorporation

Answer

Memorandum of Association

Question 24

What is the role of Companies House in the UK?

Accepted Answer

Registers companies and maintains public records of company information

Answer

Regulates competition and prevents anti-competitive practices

Answer

Enforces corporate governance standards

Answer

Provides legal advice and representation to businesses

Question 25

What is a 'dormant company' in the UK?

Accepted Answer

A company that has been legally incorporated but is not currently trading

Answer

A company that is in the process of being liquidated

Answer

A company that has been placed in administration

Answer

A company that has been struck off the register at Companies House

Question 26

Which of the following actions would typically require the passing of a special resolution by shareholders?

Accepted Answer

Changing the company's articles of association

Answer

Appointing a new director

Answer

Declaring a dividend

Answer

Approving the annual accounts